Severn Trent plan 4pc rise in next five years

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SEVERN Trent plans pegging price rises at the current average of 0.8 per cent a year in real terms, despite being hit by rising bad debts and lower water usage among cash-conscious customers.

The Midlands utility said its latest five-year business plan submitted to regulator Ofwat was based on the “lowest possible bills”.

It envisages average household bills will rise by four per cent over the life of the plan, or 0.8 per cent a year. The plan, which also contains a £2.6?billion investment programme and targets £2.6?billion of efficiency savings, “has customers at its heart”, Birmingham-based Severn Trent said.

The company, which is in the process of moving its operations to Coventry, said it had cut complaints from its 3.7m residential and business customers by 41 per cent in the last 12 months on top of a 34 per cent reduction the previous year.

ST’s financial results for the year to March 31 showed that pre-tax profit before exceptional items fell by 6.4 per cent to £273.5m as rising levels of insolvencies among its business customers and rising arrears on the part of households meant the charge for bad debts rose by £6.6m to £34m.

Lower metered water consumption cost the company a further £20.8m in revenue. Although the underlying profit figure was in line with general City expectations, the company has booked a basic loss of 24.6p per share after accounting for the loss of future tax credits from the Government’s abolition of the Industrial Buildings Allowance.